2023-04-26 15:32:58
© Archyde.com. FILE PHOTO: Men enter the CME Group offices in New York, U.S., October 18, 2017. REUTERS/Brendan McDermid/File Photo
(Archyde.com) -CME Group Inc on Wednesday posted first-quarter profits that beat Wall Street expectations, as traders turned to the exchange operator’s hedging products to navigate market volatility related to worries regarding the banking sector and slowing macroeconomic growth.
The recent regional banking failures along with the U.S. Federal Reserve’s continued rate hike cycle has roiled markets, pushing demand for hedging tools in an increasingly uncertain macroeconomic environment as investors try to dump risky assets.
“Throughout the entire quarter, there were shifting perceptions regarding the Fed’s near-term rate path as well as significant banking concerns in March,” CME Chief Executive Officer Terry Duffy said on a call with analysts.
To help mitigate those risks, many firms turned to CME’s interest rate futures, which saw volumes rise 16% from a year earlier to a record 14.5 million contracts, Duffy said.
Overall average daily volumes were up 4% at 26.9 million contracts.
The exchange and clearinghouse operator’s net income, stripping out one-time items like M&A costs, was $2.42 per share, 4 cents above the consensus estimate of analysts, Refinitiv IBES data showed.
The beat was driven in part by higher-than-anticipated revenue per contract, which benefited clearing and transaction fees, Piper Sandler analyst Richard Repetto said in a client note.
Clearing and transaction revenues in the quarter were up 5.5% at $1.2 billion. Overall revenue rose 7.1% from a year ago to $1.4 billion.
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